Tesla Motors Inc. (NASDAQ:TSLA) stock is overvalued according to former General Motors Company (NYSE:GM) vice chairman, Bob Lutz. The former GM executive is not too hopeful about the EV maker’s battery storage products.
Tesla battery idea, nothing new
Talking on CNBC, Lutz said on Monday that Tesla’s battery idea “is greatly overvalued because having batteries as backup storage has been around for hundred of years,” adding “I can’t understand the fascination with this.”
A few months back, Tesla unveiled its Powerwall, which stores electricity that can be used by owners for backup power. A 7 kilowatt-hour unit costs $3,000 while a 10 kWh can be purchased for $3,500.
Lutz saying Tesla Motors stock to be overvalued should not come as a surprise as Tesla CEO Elon Musk himself warned that the stock may be priced too high. Since the announcement of the Powerwall, Tesla shares have gained almost 25%
Lutz also believes that Tesla’s car business is unprofitable as it is “infinitesimally small.” The executive said that he cannot recommend a Sell rating on the stock as he is not an analyst, but if he was a holder,” I would think that this is the top the stock is going to reach.”
Analyst bullish on Tesla
2015 so far has been good for Tesla Motors. Stock in the firm is up 12% year to date compared to 7% for Nasdaq and less than 2% for S&P 500. The momentum has lead many analysts, including Baird’s Ben Kallo, to believe that the rise will continue. Mr. Kallo reiterated its Outperform rating on Tesla, and raised the price target to $335 from $275.
Kallo listed a few positive catalysts for Tesla such as the shareholder meeting on Tuesday, shipment numbers for the second-quarter, the launch of Model X, which is expected in the third-quarter and the Model 3 prototype, which the analyst believes will be out in the first half of 2016.
In other news, Tesla and Panasonic have taken their partnership further with the Japanese firm promising hundreds of its employees to step up the development of the so-called Gigafactory. Production at the Nevada factory is expected to start some time in 2016.
On Monday, Tesla shares closed up 2.87% at $256.29.